General Purpose Technologies And Economic Growth: Electricity Diffusion In The Manufacturing Sector Before WWII

Executive Summary

This paper evaluates the diffusion of electricity within the context of a GPT perspective. The paper develops a new comparative data set on the usage of electricity in the manufacturing sectors of the US, Britain, France, Germany and Japan and proceeds to evaluate the hypotheses of a productivity slowdown and of a productivity bonus as postulated by many existing GPT models. That technological change is an important determinant of modern economic growth is an idea that most economists would agree upon. However the details of this relationship are less clear. One hypothesis that has been extensively discussed is the Schumpeterian perspective of technological clusters. This perspective relating to major innovation has been used to model long (Kondratieff) cycles in the rate of economic growth.